Operating under pressure in 2019. The company recently disclosed that KuaiBao's annual revenue in 2019 was 2.532 billion yuan, up 3.21% from the same period last year, and the return profit was 91 million yuan, down 71.84% from the same period last year. From a single quarter, 2019Q4 revenue was 808 million yuan, down 11.43% from the same period last year, and home profit was 68 million yuan, down 62.74% from the same period last year. The company's performance declined significantly in 2019, mainly due to the company's increased strategic investment in video integrated applications, resulting in the company's expense growth significantly exceeding the growth rate of operating income. At the same time, the company actively laid out the command center, video fusion command system and other emerging businesses, resulting in a decline in the company's overall gross profit margin compared with the same period last year.
There is a certain time lag from R & D input to output. Since 2018, the company has increased its R & D investment in actual combat platforms, platforms and applications, such as artificial intelligence, big data and cloud computing, as well as increased customization and delivery efforts in the context of diversified business requirements, resulting in a year-on-year increase in R & D expenses. In terms of marketing, promoting regional sinking, service enhancement and so on lead to the increase of marketing expenses. There is sometimes a lag between the input and output of these costs, and the corresponding output of the input has not been fully released. In 2019, the implementation progress of part of the company's business was delayed, and the proportion of low gross profit margin business such as integration in the type of business composition increased. We believe that the company's operation is expected to usher in an inflection point in 2020.
The layout of cloud video conferencing takes the lead. The main users of videoconferencing in China are concentrated in large-scale institutions in government, education, transportation and other industries, which have strict requirements for the stability, reliability and user experience of the videoconference system, difficult to develop the system, and high technical barriers. The market is relatively concentrated. With the continuous promotion of information construction in various industries, the application scenarios of video conference system are becoming more and more abundant, with horizontal multi-function extension and vertical deep penetration. From simple video communication to distance learning and training, telemedicine, visual command and scheduling, interactive cooperation, data sharing and other forms. The company has been doing cloud video conferencing since 2011, with mature cloud MUC and technology, public cloud, private cloud or public-private hybrid cloud, which can be freely chosen by users. Customers also have the flexibility to choose software cloud, hardware cloud or cloud with a combination of software and hardware. In October 2019, the company released a new product of Kodak Video 6.0, which integrates emerging technologies such as intelligence, security, cloud and localization, and gradually moves towards a new journey to meet the needs of the whole industry and business through the characteristics of openness, integration, collaboration and ease of use.
Profit forecast and investment advice. The company has invested a lot in R & D over the years, with R & D investment reaching 499 million yuan in the first three quarters of 2019, accounting for 28.91% of revenue. We believe that the company has an early layout in areas such as big data, cloud computing and AI, and is expected to usher in an inflection point in 2020. We estimate that the company's EPS will be 0.18,0.50 and 0.64 yuan respectively from 2019 to 2021, giving the company a valuation of 25x 30 times PE in 2020, with a six-month reasonable value range of 12.5 to 15 yuan per share, with a "better than the market" rating.
Risk hint. Market competition intensifies, the development of video conferencing and video surveillance industry is lower than expected, and the improvement of marketing channels is lower than expected.
